A sulfhydryl group was introduced into the glucagon molecule by reacting glucagon with 2,4 dinitrophenylsulfenyl chloride. The resultant Trp-(2-dinitrophenylsulfenyl)-glucagon was reduced by thiolytic cleavage to 2-thiol-Trp-glucagon. The thiol derivative oxidizes to the dimer (Trp-S-glucagon)2 at pH 9.0 when exposed to air. All three thiol derivatives of glucagon proved to be equipotent on a molar basis with glucagon in the activation of adenylate cyclase in rat liver plasma membranes. These findings indicate that bulky constituents on the Tryptophan residue do not interfere with binding and action under assay conditions. However, it was found that the glucagon dimer binds to the glucagon receptor with lower affinity than the glucagon monomer. GTP, which modifies the glucagon receptor and which activates adenylate cyclase through a GTP-regulatory unit causes the receptor to bind equally the dimeric and monomeric forms of glucagon. These findings provide supportive evidence that the glucagon receptor exists in an oligomeric structure in which, perhaps because of steric hindrance, the bulky glucagon appendage on the dimer interferes with binding. GTP, by dispersing the oligomeric structure to monomers, allows the dimer to bind (and act) with potency equivalent to that of glucagon.